New dentists: How much debt is too much?

Unfortunately, dentistry is the debt profession. No other profession has a practice ownership entry barrier like dentistry. Why is practicing so expensive? There are two reasons.

Sep 22nd, 2016
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With student loan burdens increasing dramatically, and with practice acquisition costs continuing to climb, the essential question for young dentists is "How much debt is too much?" Is there an absolute amount that crosses the point of no return into dangerous financial territory?

Today, most articles on student loan debt are concerned with ways to obtain the best terms for repayment and how to navigate the complex choices available. Very little is written about how much debt is too much. One young dentist recently told me, "If banks will lend to me, I must not have too much debt."

Unfortunately, dentistry is the debt profession. No other profession has a practice ownership entry barrier like dentistry. Physicians typically have very little cost associated with becoming a partner in a medical practice. CPAs generally don't have to borrow $500,000 to become an owner in an accounting practice.

Why is practicing dentistry so expensive? There are two reasons. First, this profession requires significant capital for equipment and an appropriate facility. Second, dentistry is the most entrepreneurial of all of the professions I mentioned previously. Successful private-practice dentists must have excellent clinical skills and excellent business skills. There is great potential for entrepreneurial income; a large part of the high entry costs in private-practice dentistry are associated with the monetary value of an established practice's income stream (one that's typically not available to employee-dentists).

Should a college student incur $400,000 of loan debt to become a philosophy major? Probably not. The bell curve of income potential for philosophy majors would show a low probability of successfully repaying loans of that size. The issue of debt is really one of cash flow and income potential. No two dental students are the same in that regard. A dentist who incurs $200,000 of student loan debt and intends to practice as an employee for three days per week might be in worse shape than a dentist who has $400,000 of student loan debt and $500,000 of practice purchase debt, but has high practice income potential. These realities offer the key to answering the question of how much debt is too much.

Before incurring large student loan debt, every dental student must have an end (i.e., a career goal) clearly in mind. What type of practice or specialty suits you best? What career path and costs are necessary to achieve that goal? How much student loan debt will you have at graduation? What will the terms of repayment be? How much income or cash flow will you need to repay that debt? What income will you likely receive as an associate or employee? Are banks currently lending to young dentists to purchase a practice? Questions, questions, questions. I've found, however, that dentists who have credit default problems are those who didn't ask questions beyond "How much will you lend me?" In short, the issues associated with having too much debt aren't necessarily related to the absolute amount of debt, but rather to the overall level of dedication, research, and effort exerted to pursue a successful career, along with knowledge about what that career potential is likely to be.

The good news is that a career in private-practice dentistry offers very high income potential, which can overcome a large amount of entry-level student loan and practice purchase debt. The debt problem is eliminated by approaching your career dreams with intention and planning. Perhaps the right question is not "How much debt is too much?" Perhaps the right question is "What does a successful dental career look like to me, and will the financial rewards justify the income I will receive after repaying the debt?"

Brian Hufford is a wealth advisor and dental practice thought leader with Buckingham Advisors, a national, independent wealth and financial advisory firm with a specialty in helping dentists achieve their most important goals. To connect with Brian and Buckingham, visit, call (800) 711-2027, or e-mail

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